How to Save 9 Percent Monthly Further and Extra Tax on Electricity Bill: If you are a business owner, you have probably noticed that your electricity bill includes some additional taxes every month, which usually amounts to about 9% of the bill amount a significantly higher amount. These additional taxes are usually applied to commercial or industrial meters.
Even though the customer is registered for GST and all legal requirements, such as filing monthly returns, are regularly met, but additional taxes are still being charged.
Today we will explain why this tax is imposed and what is the correct way to avoid it.
Why is further tax and extra tax charged?
If the consumer is not registered for sales tax, power distribution companies add two types of additional taxes to the electricity bill, namely, the further and the extra tax of 4% and 5%
If you own a business and rent a shop or office, the electricity meter is usually in the name of the property owner, who is often not registered for GST.
Since the owner is not registered for GST, an additional 9% tax is added to the electricity bill, which has to be paid by the tenant, not the owner.
According to the law, additional tax cannot be imposed on consumers who are not required to register for GST.
Automatic additional taxes on unregistered consumers
Currently, the billing system of power companies is directly linked to the FBR data, resulting in automatic additional taxes collection from unregistered customers.
In such a case, you should inform the power company in writing that the person concerned is not required to register for GST, so that their records can be updated and unnecessary additional levy can be eliminated.
Example
If your monthly electricity bill is, for example, Rs. 10,00,000, then at a rate of 9%, it incurs an additional levy of Rs. 90,000 per month, or Rs. 10,08,000 per year which is a large amount and one that you can save.
How to Save 9 Percent Monthly Further and Extra Tax on Electricity Bill (Application):
In the application, clearly state that the electricity meter is in the name of the owner, while you are a regularly registered and compliant taxpayer. A sample Application for Saving of Further and Extra Tax on Electricity Bill application is attached herein.
Prepare a simple application and include the following information
- Your NTN and STRN
- Date of commencement of business
- Confirmation that you have filed Sales and Income Tax Returns
- You are a Tier-1 retailer and are fully compliant
- Address of the shop or office you have rented,
- Name and CNIC number of the property owner
- Copy of the rent agreement,
- And also attach a copy of the relevant electricity bill.
How to Submit Application
- The process of file an application is not online, you have to Submit to the relevant RTO
- After submitting the application, the relevant Commissioner inland revenue will verify it.
- Once he is satisfied that you are indeed a registered retailer, he will issue a letter titled:
- Exclusion of Retailer Sales Tax from Bill of Electric Supply Company
- This letter is sent to the concerned electricity company to amend its records and remove the surcharge and extra taxes from your meter.
- Once the Commissioner approves it, the WAPDA or the electricity company removes these taxes from your bill.
How Much It Take Time for Approval?
There is no set time frame for the approval of the application, as it is a manual process. The applicant has to go to the office for follow-up, which may take some time.
After approval, you can save about 9% per month on your electricity bill, which can significantly increase your profits.
If you have more than one shop or office, this saving will increase manifold.
Traders must follow this procedure as it is a legal, permanent and effective source of savings.
If you need any information regarding How to Save 9% Monthly Further and Extra Tax on Electricity Bill please Contact Us form, or reach out via our social media accounts.
